What is defined as what the company owes to others?

What is defined as what the company owes to others?

• A. Liabilities
• B. The Revenue
• C. Assets
• D. Equity

Answer: (A)

Liabilities are what a company owes to others. They are obligations that come from past events and will require the company to give up resources (typically cash or other assets) in the future to settle. On the balance sheet, liabilities show creditor claims and are categorized as current (due within a year) or long-term (due after more than a year). Examples include accounts payable, loans payable, and accrued expenses. This differs from assets, which are resources the company owns, and from equity, which represents the owners’ claim after liabilities are paid. Revenue is income earned from operating activities, not a debt the company owes.

Liabilities are what a company owes to others. They are obligations that come from past events and will require the company to give up resources (typically cash or other assets) in the future to settle. On the balance sheet, liabilities show creditor claims and are categorized as current (due within a year) or long-term (due after more than a year). Examples include accounts payable, loans payable, and accrued expenses. This differs from assets, which are resources the company owns, and from equity, which represents the owners’ claim after liabilities are paid. Revenue is income earned from operating activities, not a debt the company owes.